Is broadband ambitious for rural New Zealand?
Released 07 Feb 2011
While Federated Farmers is welcoming news Government is to commence negotiations on the $300 million Rural Broadband Initiative (RBI), the announcement raises a number of questions that need answer.
"When it comes to broadband, Federated Farmers has been pretty upfront about seeking a step change to future proof rural New Zealand," says Don Nicolson, Federated Farmers President.
"Our bottom line is pretty simple and ambitious. That's to get the greatest number of the one million Kiwis deemed ‘rural' by the RBI onto the fastest broadband as quickly as possible, as efficiently as possible and as cheap as possible.
"We're not just talking download speeds but upload speeds too.
"While download speeds are important, farmers want the ability to upload content to the web. Ultrafast upload speeds give us the opportunity to play a full part of the digital economy as well as having a gateway to true internet telephony.
"This though needs competition to drive innovation, service and price.
"For some 800,000 Kiwis in ‘rural' New Zealand, Federated Farmers wants monthly wholesale prices of around $35 and retail at around $60 for speeds of at least 10 megabits per second (Mbps).
"While there is talk of five Mbps by 2016, the first urban broadband deals are for speeds twenty times greater. Are we gong forward or treading water?
"Generally our copper is old and has its challenges, so Federated Farmers knows the solution demands a number of technologies and not just fibre. 4G Long Term Evolution (LTE) wireless is relatively new and is being rolled out in Australia, India and China. .
"So the jury is still out on these negotiations.
"Government needs to make sure it is as ambitious as Federated Farmers is in negotiating the next stage. While we're not privy to all bid details or a party to the official negotiations, we understood at least one of the other bidders was offering faster speeds sooner and at a competitive cost too.
"Ultrafast rural broadband means more productivity and social connectedness because rural people are people too. We want to export protein and fibre from the country, not our people. We want to grow exports so the country can pay its bills.
"The outcome of this RBI process will have an impact for at least a quarter of a century.
"It is that critical and demands we get the best collective possible outcome for rural New Zealand no matter how rural is defined.
"Because of this, Federated Farmers supports the Minister's suggestion that if a satisfactory outcome cannot be negotiated in the next quarter, then the RBI should be retendered.
"If it takes a bit longer to get the right outcome then so be it," Mr Nicolson concluded.
For more information contact:
Don Nicolson, Federated Farmers President, 027 226 6331
Donald Aubrey, Federated Farmers telecommunications spokesperson, 027 623 7157
Conor English, Federated Farmers Chief Executive Officer, 027 441 0786
Federated Farmers SUMMARY position ON THE RBI
Broadband Speed:
Our view is that the Rural Broadband Initiative (RBI) targets do not future proof the rural community and are generally too low. We are seeking a step change that will leapfrog our rural community forward, otherwise we will spend decades playing catch-up.
Coverage:
Obviously we want 100 percent of rural people to get broadband. However, we do appreciate the topographical challenges and economic trade offs that sometimes have to be made. While fibre gives the best performance, the solution will come in a portfolio of technologies. It is important New Zealand gains the advantage of emerging technologies such as Long Term Evolution (LTE).
Wholesale cost:
This needs to reflect the benefit of the $300 million input and be around $30 month.
Retail cost:
This needs to be around $60 with an excellent service to encourage uptake.
Datacaps:
Federated Farmers does not like data caps. Caps should only be used where there is a proven technical requirement to manage performance.
Facilitating real competition:
Competition encourages innovation and value for money. In our view, it is in the best interests of end users to have genuine retail competition with services stemming from the RBI. The successful infrastructure bidder could provide a ‘NetCo' service (a non-profit entity that builds and maintains a fibre network), with operators then retailing services to consumers.
There should be a true open access solution all the way to the end customer. Consumers should have full portability between retailers - the ability to swap their retail provider from Vodafone to Woosh for example. This will ensure the maximum amount of competitive tension. End user consumer behaviour will drive services and innovation that may come from a current provider, or a new one.
In its current state, the RBI risks creating a monopoly that will stifle economic development and innovation for the next quarter of a century. Federated Farmers had a similar concern regarding mobile termination rates and has worked to have them regulated. Whatever the outcome, it is vital that the regulatory framework ensures genuine competition.
Levy money:
The outcome of the RBI must not be influenced by what commercial organisations pay as the new levy to fund rural broadband. It must be determined on the greatest benefit to rural people and communities.
Infrastructure:
It could be a concern if Government ended up simply funding any incumbents expansion of their existing network. Therefore, existing towers should be made available on a similar basis to any new towers. The successful RBI bidder should provide a true open access solution all the way to the end customer to allow local, regional and national service providers to participate.
Rollout timeframes:
On current RBI timeframes by 2017/2018 some in the rural community may still be awaiting broadband speeds many in urban New Zealand have enjoyed for a decade. We do appreciate funding and logistical constraints but the rollout should be sooner rather than later.
